Sir,
DRAFT SPEECH BY DR HON KIM CHAM, JP LEGISLATIVE COUNCIL 14.1.1987
Adjournment Debate on "Industrial Development in Hong Kong"
Capital, technology and resources are the major
ingredients of industrial production. In a free enterprise economy, return to capital is often associated with the risk of investment, regardless whether it is a technological improvement or a product enhancement. Both are important. In this respect,
venture capital plays an important role. To illustrate this, I would like to cite two examples.
After the Second World War, a small company, invested in the commercial production of photocopying machines based on a new technology developed by two institutions. This company later changed its name to Xerox Corporation. This is a successful case
of venture capital investing in a technological breakthrough.
Another case is when DuPont invested in one of its
customers which is short of funds and put in a Chief Executive, Alfred Sloan Jr. into the company to strengthen its management. He adopted a strategy of market segmentation offering different
lines of motor cars which suited consumer tastes. As a result,
Ford Motors, which invented the motor car, had to yield its
leading position in the industry to General Motors. These two cases are significant indications of what venture capital can do to the commercialization of technology and product improvements by transfering risks to investors who can afford high risks for high
returns.
with growing international protectionism, Hong Kong must
seek to increase its domestic exports by diversification through technological improvement or product enhancement to maintain our past rate of economic growth. We cannot rely on a policy of duplicating established products and to market our goods by low